France Downgrade Presents 'Good' S&P Buying Opportunity

* This post was updated after the S&P downgrade became official after the bell.

Again a seriously negative headline out of Europe has wrested attention away from US corporate earnings and toward overseas financial woes.

Although chatter of a France downgrade had been talked about in the market since early December, on Friday the rumor become reality.

In the morning published reports suggested a downgrade was imminent and then after the bell, S&P not only downgraded France but they also downgraded several other European countries including Italy, Spain and Portugal. (It’s important to note they did not downgrade Germany.)

Ahead of the 'official' downgrade the S&P 500 and Dow whooshed lower – and the Fast pros thought the sell-off presented a good buying opportunity.

“It’s already priced into the market,” says trader Jon Najarian, referring to the one notch downgrade of France.

To confirm his thesis, Najarian points to the Volatility Index. “The Vix popped on the news but then pulled back. It’s still a very low number – institutional investors are not scared –they’re still in,” he says.

France Downgrade & Short the Euro?

Why now is the time to short the euro, with MacNeil Curry, Bank of America head of FX; Steve Weiss, Short Hills Capital managing partner; and CNBC's Michelle Caruso-Cabrera has the details on whether debt deal talks in Greece could be hitting a snag.

Trader Zach Karabell agrees entirely. “Real world impact from the France downgrade will be about the same as the S&P downgrade of US debt in July – zero.

And Karabell says that fully aware that there could be other negative headlines; negotiations between Greece and the banks to whom they owe money have halted – and it’s more likely Greece is looking at an involuntary debt reduction rather than a voluntary one – which would trigger credit default swaps.

But despite the potential tape bombs Karabell says, “The market is prepared for things to get worse. I think we’re less prepared for the markets to shrug off bad news out of Europe and move with the strength of earnings up toward 1350.”

The usually cautious Patty Edwards shares the optimistic outlook. “On the pullback I’m legging into dividend payers,” she admits. “I don’t want to take a lot of risk but I want to be in the market,” she says.

Trader Steve Grasso is more skeptical. “My bias is lower,” he says.

Grasso thinks the market is again about to test 1275, which was the Egypt bottom. If it holds it should be considered support but he doesn’t think it will – and if it doesn’t hold, 1275 it will become resistance.

“Frankly I’m shocked by the support we’re seeing,” he says. “My bias is lower, I think we go back down to 1200, but I do think a lot of it is already price in.”

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Patty EdwardsTrutina Financial is long PMTrutina Financial is long CTrutina Financial is long GLDTrutina Financial is long MSFTTrutina Financial is long INTCTrutina Financial is long AMZNTrutina Financial is long EBAY

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